Retail stocks fall as shops reopen, Darktrace hopes to avoid Deliveroo IPO curse, and markets in Europe and Asia retreat

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Retail and leisure reopening

“The presence of snow in parts of the country was a nasty surprise as retailers and leisure operators opened their doors for the first time in months. They will be hoping the white stuff doesn’t settle and that sunshine quickly brightens the public’s mood,” says Russ Mould, Investment Director at AJ Bell.

“Reports on social media would suggest that hairdressers and barbers needn’t worry as demand is sky-high. A lot of pubs have also seen strong bookings, which means all eyes are on the retail sector to see if people are happy to get back in the shops or whether they’ve become addicted to the online channel.

“The jury is still out judging by Monday’s early share price reactions. Primark owner Associated British Foods slipped 1.7%, Games Workshop fell 2%, WH Smith was down 1.8% and JD Sports retreated 1.4%, the latter despite big queues at its flagship store in London’s Oxford Street before its doors opened.

“While it is possible that we’ll see plenty of people venturing into the shops today, particularly as it provides an excuse to finally get out of the house, retailers need strong footfall to be sustained for more than just a few days otherwise they face more difficult times ahead. It seems inevitable that we haven’t seen the last of the retail sector casualties.”

Darktrace

“There is a lot riding on Darktrace’s forthcoming IPO after Deliveroo’s stock market flop. The food delivery company’s IPO disaster has put a cloud over the UK tech sector and whether other tech entrepreneurs would really want to risk floating their company in London.

“If Darktrace manages to float its shares successfully and see them rise in value once trading begins then sentiment may improve towards London as a listing venue.

“Darktrace’s services are certainly in demand as companies around the world fight cyber security issues. However, there is still some controversy to accompany its stock market debut involving two individuals who invested in the company at an early stage: Mike Lynch is battling extradition to the US and his former colleague Sushovan Hussain is serving time in prison for fraud.

“It will be interesting to see if prospective investors view association with these two individuals as merely unfortunate or actually a reason not to buy the shares.”

Markets

“It’s not a bright start to the new week, with stocks falling across Europe and Asia. Miners, banks, real estate and energy companies dragged the FTSE 100 down 0.6% to 6,877.

“Tech companies in Asia were weak on fears that Alibaba’s $2.75 billion fine for abusing its market dominance could lead to other players receiving antitrust fines. The Hang Seng Tech index fell 1.7%. This threat has been in play for some time and investors shouldn’t be surprised to see the Chinese authorities get heavy.”

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